When Will State Budget Be Approved?

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Aired 3/18/11

California lawmakers agreed to cut $7.4 billion from the state budget this week, in an effort to eliminate a $26.6 deficit. What other areas of the budget could be cut? And, when is the deadline for the legislature to approve the governor's proposed special election?

California lawmakers agreed to cut $7.4 billion from the state budget this week, in an effort to eliminate a $26.6 deficit. What other areas of the budget could be cut? And, when is the deadline for the legislature to approve the governor's proposed special election?

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Let's turn to you Michael, our point person on this. How much have state lawmakers agreed to cut so far?

M. SMOLENS: About twelve billion give or take. They came up with about 14 billion dollars in solutions. We have a 26.6 billion dollar deficit. Keep in mind that's compared to a general fund of about 85 billion. It's a huge amount. They have taken a breather. They've gone at it for a couple of days and probably have some quiet discussions over the weekend. But oddly it's being framed as they did the easy stuff because the tough stuff whether they can put a ballot measure in June to extend tax increases, and this redevelopment issue whether they're going to kill redevelopment agencies or keep them alive. I find it ironic the fact there were 12 billion or more in cuts that are going be devastating particularly at the lower end of the economic scale that can least afford it, and yet those were the easy decisions. That is how bad the budget situation is at this stage.

A. St. JOHN: Your paper today had quite a detailed account of how will affect things in San Diego even without the tax extension.

K. DAVY: That what based on the local official's best estimate of what local impact would you if the tax extensions come through. Even at that we are talking about twelve billion or more in cuts that is the best case scenario. It will be a huge impact across the board. Virtually everyone would be affected in one way or another. Particularly those trying get off of welfare who need child care the elderly aged blind, their subsidies would be slashed. It would be a world of hurt. Then if they don't have the tax increases, it's really going to be something.

A. St. JOHN: But most of the focus seems to be at the moment on this issue of redevelopment. Those cuts as you said Michael were passed and that was supposedly the easy part. Redevelopment seeming to be a sticking point, doesn't it Andrews?

A. DONOHUE: I should not be surprised by this, but it's amazing how much it's shaping up to be a partisan issue. Here you have redevelopment at its core is a very economically liberal theory. The idea the public markets will not be able to fix up neighborhoods so you need to inject public subsidies into that because the private business will not take care much had it. Here you have all Democrats lining up behind it and the Governor only needs two Republicans to get behind it in the Assembly, and he can only get one. There seems to be abandoning of ideology and more alignment towards pure partisanship. The idea of redevelopment and doing away with is it is huge deal. It looked like it was dead for a while, and here the Governor is still trying to wrestle up that one republican vote for it.

A. St. JOHN: Kent I know there are several cities in North County that have taken action so that if redevelopment agencies are eliminated they are protected. I'm wondering if you think that these strategies if you could explain what they are will they jeopardize the city's financial stability?

K. DAVY: That remains to be seen yet on what happens with the legislation with regard to redevelopment. What kind of legal challenges the city may face. You have some cities like the city of Vista has its redevelopment agency owed it I don't remember the specific numbers but say 15 million dollars, something like that. So the city turned around and did a deal to buy all the real estate that the redevelopment agency had for basically an excusing of the debt. So they traded the debt to RDA for the property. Now the city owns the property and the RDA doesn't have it. Whether that ultimately holds up or not I have not a clue.

A. St. JOHN: Before we move on Michael the City of San Diego 4 billion dollars is that similar

M. SMOLENS: They approved all this money for future projects and more recently they shifted ownership of existing properties throughout the city and redevelopment agencies to City ownership. As Kent alluded to all these things will be subject to potential legal challenge. A lot of experts think they can't do it legally if the Brown proposal goes through. That is just one element. The one thing we have not talk about, do they have the votes for the redevelopment thing, can he get the votes to even put this tax measure on the ballot? That is really the big shoe to drop next week to see if he can get the handful of Republican votes needed to do that, not necessarily to support the tax extensions but just put it before the voters. A. St. JOHN: Did you have another point to make about redevelopment:

[CHECK AUDIO]

SPEAKER?: With regard to the redevelopment issue, all it is stuck, as Andrew says, in Sacramento on a partisan split. I think that is driven by a local versus state power split, as in local authorities saying we don't want to have to give up our tax dollars to the state on an almost non ideological basis because every one of the cities has this little public agency that decides which deal to do with which sets of businesses and give them tax breaks.

In addition there is another element very hard push, and that's the entirety affordable housing sector in industry that sits as the beneficiary of RDA because that is one of the principal components of all those RDA plans is affordable housing.

A. St. JOHN: Yeah. Do you think that there is the game that is being played in Sacramento right now is particularly interesting for the Republicans because they are in a very strong position with the one or two votes that need to be captured for the Governor to get his way. What are the main issues that the Republicans are pushing for at this finality stage, Michael?

M. SMOLENS: There is a group talking with the Governor called the GOP five, five senators. They have laid out some areas where their chips that they want to have on the table in order to go forward with this ballot measure. Less regulation, particularly environmental regulation which are very controversial. They want changes this the pension system, basically to somehow to reign that in. Neither of those changes would help out the budget really at all immediately, but those are long term things they think are important for the health of the state and business and so forth. So those are two key areas that are very difficult for Democrats to swallow, particularly labor unions which of course have a lot of sway in the democratic circles. So that's part of where the negotiations are. They are in a strong position. Some people say what does this have to do with the budget? That is what budge negotiations always come down to. If you've got that last vote or two, you're in a very strong position usually. We'll see if they get that

A. DONOHUE: And you have the weird situation Republicans are in which is Republicans in Sacramento are arguing that the democratic cuts hurt the poor too much. So you have everybody is putting on a different hat today.

K. DAVY That is an interesting idea because one of the things that you have a very liberal legislature has imposed severe cuts on poor, Health and Human Services. You can argue draconian cuts. At the same time the protection of their constituent base, to the extent it's state public workers, has remained relatively unscathed. This budget proposal called for reduction 4,000 state FTEs on a base of about 350 and is actually I think up from two years ago. So that is relatively flat. It's been that's who wins in this I think

A. St. JOHN: (888)895 5727 if you have comments or questions for the Editors of the Rountable. Laurie Saldano is on the line. Thanks for calling. You have some insight to what is going on in Sacramento

L. SALDANO: For six years we have done these cuts on the poorest people in the state and the Republicans ironically represent the majority of communities that require subsidies from the more affluent and democratic communities. We have a divide in the state where the more affluent communities subsidize social services in primarily and rural agricultural Republican communities. I think those cuts are finally coming home to roost. The republicans realize their constituents they are voting against their own interests with these cuts, and they have a state convention this weekend and they don't want to put up those cuts and have to confront the delegates at their state convention. Especially since many of them, if not all of them, have signed on the Grover Norquist pledge not to raise taxes. So that is some of what has happened. The economy is now finally coming home to roost even in those Republican communities that rely on social services disproportionately and they are tired of these cuts.

A. St. JOHN: Thanks for that perspective, Laurie. Maybe there would be shift in republican attitudes after this weekend. Kent what is your reaction to that comment?

K. DAVY: I would be more inclined to believe the Republicans don't want to show up at their convention having signed on to tax extensions or tax hikes, as opposed to cuts to the poor.

NEW SPEAKER: [CHECK AUDIO] One of the interesting dynamics as Laurie said, there is the state republican convention up in Sacramento at this time, so the conventional wisdom was they weren't going to get a vote on even the ballot measure to put taxes on the ballot before then because these people would be if not lynched figuratively certainly pilloried and castigated at that convention. So most people think that maybe they can get some of the people in the middle of the party, some of those senators to sign on just to the ballot measure, not necessarily to support the taxes. It is kind of ironic that this being billed as support for taxes or not, and the Governor as said as loudly as he can, this is putting it before the people. Why would you deny the people a vote on a budget that is going to affect them in such a severe way, trying to frame it as republicans are against democracy and so forth. So it is just kind of an interesting discussion.

A. St. JOHN: Difficult situation.

58 percent, according to a Field Poll, of Californians would vote to extend taxes if it gone on the ballot. I assume it's just just a simple majority it would need, is it? Not two thirds.

NEW SPEAKER: [CHECK AUDIO] To get it on the ballot takes two thirds of the legislature.

A. St. JOHN: Got it.

Andrew were you wanting to make a point there?

A. DONOHUE: The Governor to me is emerging as possibly a strong man here. He is moving very fast. He set up camp in the assembly speaker's office this week just to twist arms and get Democrats behind him. If he's able to pull this off and get those two Republican votes he needs I think it would be quite a victory for him.

A. St. JOHN: We've to take a break here, But we'll come right back. You are listening to Editor's Roundtable with Michael Smolens of the UT, Andrew Donohue of Voice of San Diego and Kent Davy editor of North County Times. Stay with us on KPBS.

A. St. JOHN: You are Editor's Roundtable here on KPBS. We are talking about events in Sacramento. We were talking during the break about the difference between the way our current governor Jerry Brown is dealing with this negotiation challenge from his predecessor. Michael, do you have any observations on that?

M. SMOLENS: Andrew struck on it that it's unique and different and refreshing a lot people up in Sacramento find it the governor is going down to the legislative it floor. He is setting up shop in the Assembly Speaker's office across from the floor to twist arms to talk to people. His whole approach is different from Governor Schwarznegger who was a famous superstar and a lot was made of his smoking tent with the cigars, he was more removed from them. And Governor Davis was also arms length. So people find that refreshing. And also sudden lie the Governor who is deemed as a liberal and real ideologue back in his incarnation back in the 70s when he was governor is really coming off as the pragmatist trying to get things done. He's willing to deal. We'll probably see some changes on pensions if they get a ballot measure he will get a lot of opposition to that but I think everybody is acknowledging that the pension situation has to change given all the debt and the universal recommendations that something has to be done now.

A. St. JOHN: (858)895 5727 is our number and Leonard is on the phone from Scripps Ranch. Leonard, thanks for joining the editors

LEONARD: Thank you for having me. One thing that has bothered me all along is that this whole log jam was not necessary. This disingenuous side of the Democrats coming out saying we have to have a two thirds majority. The voters spoke in November and gave the legislator a chance to do the budget at a simple majority. The election could have been called with a simple majority, but the Governor made it a [CHECK AUDIO] victory by making it a constitutional amendment. Why do you need a constitutional amendment to put a ballot measure on the ballot? They have forced this log jam to happen because they are trying to get I guess republicans on board, obviously but if they believe in what they are doing, they have the ability to do it and they are causing this on their own.

A. St. JOHN: Any reactions to that? Thanks, Leonard.

M. SMOLENS: Leonard brings up a good point. It really wasn't discussed that much. I think some people questioned whether they could legally put it on a simple majority. He is right they can pass the budget but this is different from the budget. I thought initially they could do what Leonard said. Beyond that the Governor wanted to avoid a legal confrontation. He needed a buy in from Republicans. Getting it on the ballot everybody will declare victory, but that is not the victory. Without some sort of Republican buy in it probably would have no chance at the polls. That is of course the real end game. So I think that was part of the strategy as well that if they could not get a two thirds that pushing it on a simple majority would be dead on arrival in June. I think there was a legal question. At least that's what the Governor's people were saying.

A. St. JOHN: It is a bit distressing as a voter you think you just solved it by giving them the majority and now here we are up against the two thirds again. Kent you were just talking about what might have happened if the election had gone the other way in November.

K. DAVY It's very interesting that Brown if you try and think about what kind of governor and what kind of position Meg Whitman would have been in today from her point of view, it's inconceivable that there would be anything but blood here in terms of the budget that there would be any talk of a deal to extend or raise taxes. It just wouldn't happen. Brown was the only person I think on the political scene who could come and be positioned far enough left to be able to say here are the massive cuts I have propos doing and if you will give me a deal to try to raise some money

A. St. JOHN: Do you think that Brown has made people aware enough of what these cuts will actually mean?

NEW SPEAKER: [CHECK AUDIO] I think he has done a very good job of framing the conversation. To think that a former big city democratic mayor would go after redevelopment in itself is remarkable and the way he has framed these conversations, all the mayors of big cities got angry about the redevelopment proposal, and he clearly said okay this is a battle about schools versus big buildings. If you want to deep having your big buildings and your civic projects, we will not be able to fund schools properly. Even in this week I think he has done a good job framing the debate for the Republicans who won't go along with him in saying you can't be against cuts and against taxes and think we can actually balance the budget.